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Technology versus trust: Non-bank credit systems from notarized loans in Early Modern Europe to cryptolending

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  • Fantacci, Luca
  • Lorenzini, Marcella

Abstract

The application of distributed ledger technology (DLT) in the financial sector has fostered the development of new services that are frequently referred to collectively as ‘decentralized finance’, or DeFi. In the wake of these recent developments many observers and practitioners regard DLT as a major technological disruption to the financial system, possibly leading to the complete disintermediation of banks and to their substitution with a network of bilateral relations between borrowers and lenders recorded in a common ledger. Recent historiography has shown that a potentially analogous system existed in Ancien Régime societies whereby finance was provided not only by specialized intermediaries, but also by an ‘informal’ credit network where debtors and creditors entered directly into relationship through notaries. In this paper, we carry out a systematic comparison between cryptolending, an extreme form of DeFi at the technological frontier, and the early system of peer-to-peer lending represented by notarized loans in the early modern period. Our aim is to assess the true novelty of current practices and to understand if, and in what sense, the technological innovation represented by DLT can effectively produce a structural change in the functioning of the financial system.

Suggested Citation

  • Fantacci, Luca & Lorenzini, Marcella, 2024. "Technology versus trust: Non-bank credit systems from notarized loans in Early Modern Europe to cryptolending," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 83-95.
    • Handle: RePEc:eee:streco:v:69:y:2024:i:c:p:83-95
    DOI: 10.1016/j.strueco.2023.11.010
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    References listed on IDEAS

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    1. Zhang, Ying & Gong, Bing & Zhou, Peng, 2024. "Centralized use of decentralized technology: Tokenization of currencies and assets," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 15-25.
    2. Haochen Guo & Xiaoxing Liu, 2025. "Exploring trust dynamics in finance: the impact of blockchain technology and smart contracts," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-10, December.

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